16 Must Have Elements Your Tax Invoice Should Have

essential invoice elements

Introduction to Invoices:

Commercial operations cannot be run in India without provision of a tax invoice. An invoice is a proof of sale and contains a few particulars that identify the product sold, taxes involved, states of production and consumption, etc.

A tax invoice is called a “Bill” in common parlance. However, the one major difference between an invoice and a bill is that a bill states that money is owed for certain purchases, while an invoice is an itemized statement which contains particulars of goods sent, and sums up the money owed.

16 Must Haves on Your Tax Invoice

Uses of an tax invoice:

A tax invoice has quite a few uses. The most important of them are briefly described below:

  1. Maintaining Records: A sales invoice is a proof of sale. Its basic purpose is to maintain records of sales. A sales invoice is also helpful in determining if full payment for the sale was received or not. They are also used to track inventory. Sales invoices are thus invaluable to book-keeping and maintaining records.
  2. Tax Purposes: In India, a sales invoice must contain the seller’s tax information. The invoice also tells the consumer about the taxes he is paying to the government. In India, GST details, such as the seller’s GSTIN, GST rate, etc. must be mentioned on the invoice.Sales invoices are very helpful while filing taxes as the business owner has a track on transactions of the business, which ensures that they pay the correct amount of tax.
  3. Legal Purposes: As stated earlier, a sales invoice can be used as a proof of sale, as it contains all the details of the transaction, including the type of good sold, its quantity, price, warranty details, etc. This can be helpful in defending the business against potential lawsuits.

Most important components of an invoice:

According to Section 31 of the CGST (Central Goods and Services Tax) Act 2017, a tax invoice must contain the following components:

  1. Registered Name, Registered Address and GSTIN of the seller.
  2. Uniquely Generated Tax Invoice Number, specific to the current financial year.
  3. Date of Issue of Invoice, or concurrently, Date of Sale of Goods.
  4. Registered Name, Registered Address and GSTIN of Buyer (optional)
  5. If Value of Invoice Exceeds Rs. 50,000 the invoice must containi.   Name & address of buyer
    ii.  Delivery address.
    iii. Delivery state & state code.
  6. In the case of goods, their HSN code. In the case of services, accounting code.
  7. A brief description of Goods/Services.
  8. The quantity/number of goods, and the unit of measurement.
  9. Total value of the invoice, or the total value of the goods/services.
  10. Taxable value of the invoice, after applicable discounts.
  11. Rate of GST applicable in the case (including rates of CGST, SGST, IGST, cesses, etc.)
  12. Total amount of GST (including a breakup of total tax amount with respect to CGST, SGST, IGST, etc.).
  13. State from which the goods are supplied as well as their destination (in case of inter-state trade).
  14. Address of Delivery of Goods.
  15. GST on a reverse charge basis.
  16. Seller’s signature.
The Bottom Line:

While invoicing under GST might look a little difficult, it really isn’t. Preparing and maintaining tax invoices is paramount under the GST regime. Failure to do so may also attract a penalty.

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